Developers Can Sell Brands' Products Within Apps for a Revenue Cut

However steeply as mobile ad spending is expected to rise in the next several years, app developers in practice still find themselves struggling to convince many marketers that those tiny strips of real estate are worth all the effort and sometimes limited reach.

Now Amazon is trying to give developers another option for that real estate with its mobile ad units enabling Android apps to sell products and receive a cut of up to 6%. A company like Electronic Arts, for example, could use the new ads to offer NFL team jerseys to people playing the Madden NFL 25 mobile app. Angry Birds maker Rovio could market the game's line of plush toys. The products being offered just have to be available on Amazon.com.

Should the move succeed, the e-commerce giant could add a significant piece to the ad business it has been quietly piecing together as a potential rival to Google's and Facebook's.

Amazon's Android-powered Kindle Fire tablet

Not only does the mobile commerce ad unit expand mobile's advertiser base beyond the typical pool of app publishers looking to drive downloads -- Amazon's new program in fact prohibits selling other apps -- but it does so without requiring app publishers operate an in-house sales team.

Amazon "is big enough that they can catalyze the market for a small player, especially if it makes it possible that [the smaller app publisher] doesn't need to build a sales force, so it makes monetization of advertising much easier," said Brian Wieser, senior research analyst at Pivotal Research Group.

App publishers may have some hesitations, however, about Amazon's mobile commerce ad product. For starters there is less of a guarantee they will make money from the ads than other available options.

App developers using an ad network or exchange at least know they will be paid, whether according to the number of ads shown or the number of clicks, said Paran Johar, CEO of the Mobile Media Summit event series and former CMO of mobile ad network Jumptap, in an email. "What Amazon is saying is that app developers will only get paid if someone actually transacts," he said.

That's a big if considering that clicking on an ad, let alone making a purchase through it, can interrupt someone's use of an app. Amazon's mobile commerce ads can feature the company's one-click ordering system, but even if app users don't mind interrupting their activity, who's to say enough of them will make actual purchases to turn the publisher's cut into a significant revenue stream? Developers will need to figure out which products to market, and how, Mr. Johar said.

If mobile app publishers are able to make serious money from Amazon's mobile commerce ads, and if Amazon were to extend the program to apps on Apple's iOS mobile operating system -- two more big ifs -- the e-commerce giant could make a serious dent in the mobile advertising landscape currently dominated by Google and Facebook.

Because mobile advertising is "still such a nascent space... activity such as this could either lead to Amazon taking share of the existing market or create growth for the broader market," Mr. Wieser said.

Google and Facebook dominate mobile ad sales largely because it's so simple to buy their inventory, more or less a matter of checking the box for mobile when placing a traditional desktop buy, according to Jared Belsky, exec VP at digital agency 360i. "For the rest of the list, the buying process for mobile is more labor-intensive and the pricing model is less uniform," he said.